Management and Entrepreneurship

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Chapter ± 1 Management

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Objectives
 To expose the students to a number of important concepts of management  To throw light on the complex set of roles performed by the managers  To understand the skills required to perform various management roles  To provide an overview of several influential approaches that have shaped managerial thinking during the past century.
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Meaning
 ³Management is the art of getting things done through and with the people in formally organised groups´«..Koontz H.
 ³Management is the process of planning, organising, actuating and controlling to determine and accomplish the objectives by the use of people and resources´«..Terry G.
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Nature & Characteristics of Management
 Critical element in the economic growth of the country.  Essential in all organized effort, be it a business or any other activity.  Dynamic and life giving element in every organization.  A process, discipline, activity.  Intangible, goal oriented & universal.
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Scope of Management
 The scope is very wide.  According to Herbison & Myers, it refers to three distinct ideas. i) as an economic resource ii) as a system of authority iii) as a class or elite.

Management: Science as well as Art
 Art of management is as old as civilization.  Science of developing management is young and

 Both are complementary & mutually supportive

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Management: Science as well as Art
 According to Peter Drucker: ³Every organization has the same resources to work with. It is the quality of management that spells the difference between success and failure´.  Ability to solve problems requires knowledge & constant practice sound

Management as a Profession
 No regulatory body and code of conduct leads to neglection of service motto.  Not a recognized profession ,but moving in that direction .  Some initiatives are: separation of ownership from management, state regulation of business activities, proliferation of management institutions, etc.
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Management & Administration
 Controversy over the meaning of the terms Management and Administration.  Three schools of Thought- administration is broader than management, administration is part of management, management and administration are identical.  American School of thought: Administrators think, managers act; administration is a top level activity, management is a lower level function. Proponents-Ordway Tead, Oliver Sheldon, 26 W.Spriegel.

Roles of Management
 According to Robert Katz, the following skills are required for managers job:
± Technical skills( knowledge and proficiency in a specialized field), ± Human skills( ability to work well with other people individually and in a group), ± Conceptual skills( ability to think and to conceptualize about abstract and complex situations).
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Levels of Management
 Three levels exist in Management ± ± first line managers( responsible for the overall direction and operations of an organization), ± middle managers( translate the broad strategies into specific goals for implementation) ± top line managers( responsible production of goods and services). for the

Classical Organizational Theory School The Behavioral School Management Science The System Approach The Contingency Approach

Source: Management by Stoner

Dynamic Engagement Approach 35

Development of Management thought
 Management is as old as human civilization. Ex: Egyptian pyramids, Great Wall of China.  During 1400¶s: Venetian business enterprises and their management practices  During 1776: Adam Smith described the advantages of division of labor and specialization.  Beginning of 18th century: Industrial Revolution resulted in the advent of machine power , mass production and efficient transportation.
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Scientific Management
 Basics of Scientific Management ( 4 principles)
Each task must be scientifically designed so that it can replace the old, rule of thumb methods. Workers must be scientifically selected and trained so that they can be more productive . Bring the scientifically designed jobs and workers together so that there will be a match between them. Division of labor and cooperation between management & workers.
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Scientific Management
Taylor summed up his approach in these words: i. Science, not rule of thumb ii. Harmony, not discord iii. Cooperation , not individualism iv. Maximum output in place of restricted output v. Development of each man to his greatest efficiency vi. Equitable division of work
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Administrative Management Theory
 Henry Fayol(1841-1925) developed this theory.  Focuses on principles that can be used by managers to coordinate the internal activities of organizations.  Explains the process of managing an organization from the top managerial perspective.  Five functions to be performed by managers: planning, organizing, Commanding, Coordination, Controlling.
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Administrative Management Theory
 Managers should apply 14 principles at the operational level:
Division of work Authority and Responsibility Discipline Unity of Command Unity of direction Subordination of individual interest to the common good
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Human Relations Theory
 Elton Mayo(1880-1949) contributed to this theory.  It is a movement in management thinking and practice that emphasized satisfaction of employees¶ basic needs as the key to increased worker productivity.  Compensated the deficiencies in scientific management and administrative management.  Gained popularity after studies of human behavior at work situations during 1924-33.
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Human Relations Theory
 Hawthorne Studies: A group of studies conducted at the Hawthorne plant of Western Electric company whose results ultimately led to the human relations view of management.  Illumination Experiment: Test group Vs Control group, Illumination Vs Productivity.
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Human Relations Theory
 Hawthorne Effect: The possibility that individuals singled out for a study may improve their performance simply because of the added attention they receive from the researchers, rather than because of any specific factors being tested.  Bank wiring Experiment: Group norms influencing individual behavior Vs Economic incentives.
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Human Relations Theory
 Key Concepts: The individual-not only motivated by economic factors but also by social & psychological factors. The work group-workers find satisfaction in the member ship of social groups. Work environment-to be conducive for both organizational and personal growth. The leader-should provide participative climate.
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Concerned only with operative employees Over concern on happiness ± productivity link Anti individualistic Not a scientifically designed experiment.
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Behavioral Approach
 Developed as a natural evolution to Hawthorne Experiments.  Hawthorne studies stressed on emotional elements to explain human behavior and performance.  Behavioral approach emphasizes on scientific research as the basis for developing theories about human behavior in the organizations that can be used to develop practical guidelines for managers.
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Systems Approach
 Integrated approach to management problem solving and decision making  Advocates: Chester Barnard, George Homans  Key Concepts of this approach: System is a set of interdependent parts Concept of holism System can be open or closed System has a boundary
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Systems Approach
 Tries to solve problems by diagnosing them with in a frame work of inputs, transformation processes, outputs and feed back  Good balance between the needs of various functional parts of the enterprise and goals of the firm as a whole.  Conceptual frame work to understand organization is too abstract.  Does not identify situational differences and factors
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Environment

A D E
Sub-systems

B

C

System Approach

Environment
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Contingency Approach
 Also termed as Situational approach  Based on the premise that situations dictate managerial action  Advocates: Selznic, Woodward, James Thompson  Appropriate managerial action depends on the particular parameters of the situation  Spells out the relationship of the organization to its environment  Concerned with structural adaptations of organizations to its task environment.
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